ABSTRACT: Issuing the final report on its energy sector inquiry, the European
Commission pointed to a range of competition concerns across the EU energy
sector, including a lack of integration and transparency. In particular,
however, the Commission identified the high degree of vertical integration in
energy markets as an obstacle to competition. The Commission's suggested remedy
is the separation of ownership and/or operation of gas and electricity
transmission networks from other energy supply activities; the 'unbundling' of
transmission and other activities that control market access. While the
Commission strongly favours full ownership unbundling, other possible models are
under consideration. Unbundling faces considerable political opposition from a
number of Member States. Even if the Commission is successful in its objective
of securing unbundling, it will be some time before the necessary legislation
takes effect. Meanwhile, however, the Commission has been pursuing a number of
investigations into individual energy companies. A key theme of those
investigations has been the alleged abuse of transmission network activities in
order to restrict competition on energy supply markets. Practices under
investigation by the Commission include 'strategic under-investment' in network
infrastructure. Remedies under consideration include the divestment of network
activities. Any such remedy is likely to take effect ahead of legislative
unbundling. Ordering unbundling as a remedy in individual competition cases
would be a development for which there is little precedent. This raises the
question whether the Commission has demanded concessions which it would not have
done in the absence of wider concerns about the energy sector, or whether its
work on the sector inquiry has simply provided it with a deeper understanding of
the issues. There are also questions about the power of the Commission to order
such divestment remedies. This article examines the background and the issues.

ABSTRACT: The Department of Justice (“DOJ”) monopoly report is enormously
disappointing for a number of reasons. The Federal Trade Commission
(“FTC”) was wise to participate in this important project, but equally
wise to distance itself from the final work product. The final report
represents a serious effort, but reads in too many places like a
justification for a record of inaction by the DOJ and an attempt to
lock in future administrations to a similar course.

I
suspect that the report will achieve neither of these goals and hope
that the DOJ’s Antitrust Division of the next administration rejoins
the FTC in bringing both innovative and traditional monopolization
investigations and cases where appropriate.

ABSTRACT: Antitrust law's Walker Process doctrine permits a patent infringement
defendant to show that an improperly maintained infringement action
constitutes unlawful monopolization or an unlawful attempt to
monopolize. The infringement defendant must show both that the lawsuit
is improper, which establishes the conduct portion of the violation and
generally satisfies tort law requirements, and also that the structural
prerequisites for the monopolization offense are present. The doctrine
also applies to non-patent infringement actions and has been applied by
the Supreme Court to copyright infringement actions. Walker Process
itself somewhat loosely derives from the Supreme Court's
Noerr-Pennington line of cases holding that while the right to file a
lawsuit is grounded in First Amendment concerns, the right does not
extend to "baseless" litigation. The doctrine has not been particularly
effective, however, mainly because patent boundaries are so poorly
defined that it is often impossible to say that an infringement suit
was baseless.

ABSTRACT: For a number of reasons - notably its limited administrative resources
- the European Commission (the Commission) seems to be relying
increasingly on methods of competition law enforcement based on
informal pronouncements (press releases, oral statements, etc.) and
soft law instruments. Surprisingly, and in stark contrast with the
extensive body of literature devoted to the Commission's more muscular
enforcement initiatives under Articles 81 and 82 EC and the EC Merger
Regulation (the ECMR), the pervasive use of soft law and informal legal
instruments in European Community (EC) competition policy has gone
relatively unnoticed.

In our view, these alternative mechanisms of competition law
enforcement raise many important legal questions - not only theoretical
but also of very significant practical relevance. For instance, is
compliance with such instruments mandatory? Are they amenable to
judicial review? Can they introduce new legal standards that depart
from established case-law? To what extent can they be relied upon as a
reference for competitive assessments, etc.?

The aim of this article is therefore to provide a broad picture of
the various formal and informal instruments through which the
Commission carries out the soft enforcement of EC competition rules. We
refer to them as sunshine enforcement instruments and explain the
reasons behind this label in Section I. We then provide a typology of
those various instruments in Section II. Finally, we explore their
advantages and drawbacks in Sections III and IV respectively. Section V
concludes.

I am conducting a survey of non-government antitrust practitioners
(including practitioners with law firms and in-house) who undertake antitrust work in the
United States to better understand how antitrust law shapes compliance.
Because of the empirical gap in our knowledge about behavior outside of
court cases, this survey has important policy and research
implications. Please take 8-12 minutes to fill out this survey. The survey will close at the end of this month.

THIS IS THE FINAL REQUEST THAT I WILL MAKE FOR THE SURVEY.

If you are a non-government practitioner
(with a law firm or in-house) who has an antitrust practice in the
United States, I ask that you take this survey. The more responses
that I can collect, the larger the survey population and the more
meaningful the results will be. So far 231 people have taken the survey. If you read this blog and are a practitioner, please take this survey. Make sure that all other antitrust practitioners in your law firm or company with a US practice take this survey too, so please forward this message to them.

ABSTRACT: This paper presents an overview of the informal Transparency Project, a
comprehensive study of the Federal Trade Commission's merger files that
grew out of the 2004 data release. Analysis is presented for market
definition, structure, competitive effects, entry, and efficiencies.
Most of the papers follow the same basic structure; they introduce an
issue related to the Merger Guidelines, review the files and generalize
from the results. Commission staff appears to apply a wide range of
models to evaluate mergers. Of particular interest are the innovations
in merger analysis, including, but not limited too, the concept of a
significant competitor, the use of evidence to test structural models
and the application of Net Present Value to entry analysis.

In a joint report, the competition authorities of Sweden, Denmark,
Finland, Iceland and Norway assembled data on how reforms in the
pharmaceutical market had worked in their countries in recent years. In
many cases, these reforms have boosted competition on the Nordic
markets.

ABSTRACT: Innovation is central to economic growth and human welfare. Government
officials and commentators have recognized this reality and have called
for a variety of different substantive incentives for stimulating
innovation. But the question of how an innovation regulator should be
structured has received little attention. Such consideration is
important not only because of the significance of innovation but also
because current government innovation policy is so haphazard. There is
no government entity that looks at innovation broadly, and the narrower
agencies that regulate aspects of innovation policy not only fail to
pay systematic attention to innovation goals but often act at
cross-purposes with each another.

In this Article, Professors
Benjamin and Rai analyze how government policy on innovation should be
structured. Drawing on existing theoretical and empirical work, as well
as their own original empirical research, they propose an executive
branch entity that would both analyze pending agency action and offer
regulatory suggestions of its own. This entity would introduce a new,
trans-agency focus on innovation while drawing upon, and feeding into,
existing executive branch processes that aim to rationalize the work of
disparate federal agencies. This approach, Professors Benjamin and Rai
contend, offers a great improvement over existing government
institutions while avoiding a costly (and politically infeasible)
remaking of the administrative state.

ABSTRACT: This paper shows that, after a 2002 European regulation prohibited the use of dealer exclusive territories, automobile franchise contracts in Italy introduced price ceilings and standards on verifiable marketing and service inputs, such as advertising and salespeople. The contracts also imposed quantity floors, a practice already in use before the regulatory change. The introduction of standards suggests that, consistent with a view of vertical restraints as coordination mechanisms, manufacturers used exclusive territories to induce desired dealer services and, once prohibited, switched to alternative contractual devices to achieve this goal. The introduction of price ceilings despite free intrabrand competition also suggests car manufacturers tried to prevent some dealers from "gaming" the quantity floors by selling to other dealers' customers, while charging monopolistic prices at their own location.

ABSTRACT: Commentators on antitrust and patent law over the past decade have
advanced the view that "patent holdup" poses a serious threat to
innovation and consumer welfare. In recent months, however, a more
skeptical literature has emerged to challenge patent holdup on both
theoretical and empirical grounds. This article responds to the
skeptics' theoretical challenge, by placing patent holdup within the
broader class of holdup or holdout behavior as discussed in mainstream
law and economics. Defining patent holdup as a type of opportunistic
behavior that threatens substantial harms to both static and dynamic
efficiency, I argue that both the law of patent remedies and the law of
antitrust should play a role (albeit a limited one) in responding to,
or enabling private efforts to avoid, patent holdup. As for remedies, I
argue, among other things, that consistent with the Supreme Court's
decision in eBay, inc. v. MercExchange, L.L.C. courts should award
damages in lieu of injunctive relief in a subset of patent infringement
cases involving serious risks of holdup-generated harm to either static
or dynamic welfare. On the antitrust side, I argue, contrary to the
D.C. Circuit's holding in Rambus, Inc. v. FTC, that a patent owner's
deceptive conduct that results in the adoption of its patented
technology or that enables the patent owner to avoid a RAND licensing
commitment can be actionable as a violation of Sherman Act section 2. I
also argue that, consistent with the recommendations of many recent
observers (including the Antitrust Modernization Commission), joint
bargaining between standard setting organizations, on the one hand, and
individual members/patent owners, on the other, over the price terms of
patent licenses should be evaluated under the rule of reason-though
only to the extent that such collective bargaining is reasonably
necessary to avoid the threat that holdup poses to dynamic efficiency.

ABSTRACT: The paper discusses the respective roles of competition policy and
sector-specific regulation for industries such as telecommunications,
electricity, and gas, in which network infrastructures that are natural
monopolies serve as essential facilities for anybody who wants to
provide services in downstream markets. Whereas, in the past, such
industries tended to be organized as state-owned or state-regulated
vertically integrated monopolies, after a fundamental change of
paradigm, appropriate governance nowadays is considered to involve
downstream competition supported by a state-mandated access provision
to the monopoly infrastructures. Following a brief sketch of the
paradigm change, the paper enters into a systematic discussion of (i)
the comparative advantages and disadvantages of the two policy regimes
in enforcing access provision, (ii) the appropriate framework for
drawing the line between regulated and unregulated parts of the
industry, and (iii) a set of issues that arise when competition policy
and to sector-specific regulation apply to a given industry at the same
time. The discussion refers to (i) the German experience before 2005
when competition policy was used to regulate access in the energy
sector, (ii) the European Directives of 2002, which rely on the
concepts of "market" and "significant market power" to determine which
parts of the industry should be subject to regulation, and (iii) the
recent cases in the telecommunications and postal sectors in which
European competition law was used to proscribe behaviour that had been
accepted by national regulators.

ABSTRACT: The Supreme Court's 2006 eBay ruling marked a turning point in injunctive relief policy. Unfortunately, there seems to be considerable confusion about the implications of the decision. Some authors, concerned over patent holdup and excessive royalty rates, interpret the eBay decision as giving a green light to district courts to deny injunctive relief to non-manufacturing patent owners. Using an error cost framework, we examine the theory and evidence behind patent holdup concerns as they relate to injunctive relief policy. We find that the holdup theory justifying categorical limitations on injunctive relief rests upon overly narrow assumptions. As a result, categorical limitations are likely to result in substantial false positives, where patent holders with no designs of patent holdup are nonetheless denied injunctive relief. Instead of advocating categories of denial, we argue that the majority opinion in eBay can and should be read as a return to a balancing test, where costs and benefits are weighed carefully before granting or denying a patent injunction.

ABSTRACT: To be admissible in federal court under the Daubert standard, expert
economic testimony must be (1) based on scientific analysis; and (2)
aid the dispute resolution process. Expert evidence should be
considered scientific when it (1) meets Karl Popper's falsification
standard; and (2) some evidence compatible with the scientific
proposition is provided. Standard competitive and monopoly models are
well supported in the literature and therefore would generally meet
this standard, while structuralism clearly fails the test. Modern game
theoretic analysis focuses on either collusion (coordinated
interaction) or unilateral effects but only raises the possibility of a
merger-related competitive problem and thus must be supported with
case-specific evidence to be considered scientific. Economic evidence
underpinning game theoretic analysis can involve either a "systematic"
study of competition in a market or a narrow "shock" analysis of a
specific economic event. When both parties to a merger dispute provide
evidence admissible under the Daubert standard, the court must resolve
the scientific dispute in the decision on the merits.

13:00 – 13:45 The Scope of Criminal Law and Criminal Sanctions: An Economic View and PolicyImplications* Roger Bowles (University of York)Michael Faure (University of Maastricht)Nuno Garoupa (University of Illinois and IMDEA)Discussant: Maurice Stucke (University of Tennessee and American Antitrust Institute)

ABSTRACT: Illinois Brick held that only direct purchasers successfully can sue
for damages under federal antitrust law. Since this left most true
victims of antitrust violations without an effective remedy, most
states enacted Illinois Brick Repealers (IBRs), to give indirect
purchasers the right to sue for damages when firms violate analogous
state laws.

Although many benefits would arise if national
legislation overturned Illinois Brick, to date every attempt to achieve
a comprehensive federal solution has failed. Because this thirty year
stalemate is almost certain to continue, this article instead focused
on reform at the state level, where reform is much more achievable.

This
article presents a large number of IBR options that address the
spectrum of a state's potential needs, together with commentary giving
the major effects, advantages and disadvantages of each. As its
Conclusion, this article suggests its own Model State Illinois Brick
Repealer legislation.

(4) Given the scale of the crisis, now also endangering fundamentally sound banks, the high degree of integration and interdependence of European financial markets, and the drastic repercussions of the potential failure of a systematically relevant financial institution further exacerbating the crisis, the Commission recognises that Member States may consider it necessary to adopt appropriate measures to safeguard the stability of the financial system. Due to the particular nature of the current problems in the financial sector such measures may have to extend beyond the stabilisation of individual financial institutions and include general schemes.

(5) While the exceptional circumstances prevailing at the moment have to be duly taken into account when applying the State aid rules to measures addressing the crisis in the financial markets the Commission has to ensure that such measures do not generate unnecessary distortions of competitions between financial institutions operating in the market or negative spillover effects on other Member States. It is the purpose of this document to provide guidance on the criteria relevant for the compatibility with the Treaty of general schemes as well as individual cases of application of such schemes and ad hoc cases of systemic relevance. In applying these criteria to measures taken by Member States, the Commission will proceed with the swiftness that is necessary to ensure legal certainty and to restore confidence in financial markets.

ABSTRACT: Although both in US antitrust and European competition law there is a clear evolution to a much broader application of "rule of reason" (instead of per-se rules), there is also an increasing awareness of the problems of a case-by-case approach. The "error costs approach" (minimizing the sum of welfare costs of decision errors and administrative costs) allows not only to decide between these two extremes, but also to design optimally differentiated rules (with an optimal depth of investigation) as intermediate solutions between simple per-se rules and a full-scale rule of reason. In this paper we present a decision-theoretic model that can be used as an instrument for deriving optimal rules for a sequential investigation process in competition law. Such a sequential investigation can be interpreted as a step-by-step sorting process into ever smaller subclasses of cases that help to discriminate better between pro- and anticompetitive cases. We analyze both the problem of optimal stopping of the investigation and optimal sequencing of the assessment criteria in an investigation. To illustrate, we show how a more differentiated rule on resale price maintenance could be derived after the rejection of its per-se prohibition by the US Supreme Court in the "Leegin" case 2007.

Another city, another all-star lineup. This time the FTC at 100 tour stops in Boston, the home of the Red Sox, Cheers, Paul Revere, and roughly 60 colleges. I suspect that a number of the participants will say something along the lines of increased reliance on the rule of reason, which the private practitioners will love to hear since it means more work for them.

Note that the FTC chose as host institutions in both Chicago (Northwestern) and Boston (BU) neither of the two universities- University of Chicago and Harvard - that have dominated the intellectual development of antitrust of the past half century.